We know what we’re going to hear from the Democrats this week at their convention, and for the next nine weeks until the election. They clearly are having trouble making the case for their tenure, not even being able to articulate a consistent and coherent answer to the question of whether we’re better off than we were four years ago.

So they are going to have to somehow make the voters fear the unknown over their recent bitter economic experience. We’ve already heard the talking point from the president himself: that Romney is proposing that we go back to the bad, old, failed Bush policies that created the mess we’re currently in. In fact (like much of the Obama campaign strategy), it is a retread from 2008, when (on zero basis) the theme was that a McCain victory would be a continuation of the Bush administration.

Accepting this argument requires that two premises be acknowledged: First, that it was the Bush policies that created the mess; and second, that Romney’s proposals are a return to them. Both of these premises are false, but the Republicans have done a poor job of pushing back against either of them. If they don’t do a better one, there is some danger that they will actually gain traction with swing voters.

The first premise is not just false, but actually turns things on their head.

While a lot of the Bush policies (e.g., expansion of Medicare, an indifference to the deficit and spending, letting Ted Kennedy write the education bill, an attempt at amnesty for illegal immigrants with no serious attempt to control the border, taxpayer subsidies for energy companies, etc.) were regrettable, and in fact part of the reason that the Republicans lost the Congress in 2006 as a result of anger about them among his own base, they were not the cause of the downturn in 2007 and the financial meltdown of 2008. In particular, to attempt to claim that low tax rates caused an economic downturn is economic insanity. I have yet to hear any Democrat explain how this can occur, yet they continue to claim that the Bush “tax cuts” (which were not tax cuts, but relative tax increases resulting from the economic growth created by the lowered rates) are one of the causes of our current problems.

But it’s not enough to simply defend against the nonsense that Bush policies created our current problems. The Republicans need to go on the offensive and take back control of the narrative with the truth — that the downturn occurred as a result of policies primarily promulgated by the Democrats.

The real cause of the current mess (ignoring the upcoming fiscal disaster caused by uncontrolled spending and deficits) was the housing boom and bust. The boom was caused by policies going back decades to encourage people to buy houses they couldn’t afford and to coerce and extort banks to lend them the money to do so. While this had some support from Republicans, it was a policy primarily driven by Democrats. It wasn’t just the free hand given to Fannie and Freddie, something that the Bush administration attempted to rein in, but to no avail thanks to corrupt Democrats like Chris Dodd and Barney Frank. It was also the action of “community organizers” like Barack Obama, who himself sued Citibank in the 1990s to compel them to give out loans to people who couldn’t afford them. As The Independent pointed out four years ago, Democratic fingerprints were all over the housing crisis:

It’s true that the improvident lending was not initiated by Fannie and Freddie: their role in this was to buy these loans and sell them on – but then the music stopped. Cynical students of the American political system will note that the biggest recipient of campaign contributions from the munificent duo of Fannie and Freddie over the past 20 years was one Christopher Dodd, Democrat Chairman of the Senate’s Banking Committee.

Rather surprisingly, given that he has only been in the Senate for four of those years, the second biggest beneficiary was Barack Obama. In August the Washington Post reported that Obama’s presidential campaign team had sought the advice of Franklin Raines “on mortgage and housing policy matters”. Perhaps Mr Obama’s team just wanted to know where all the bodies are buried – there are rather a lot of them.

It should also not go unnoted that Fannie and Freddie had wide revolving doors for well-compensated “managers” with no apparent expertise other than being former Democratic officeholders.

41 Comments, 17 Threads

1.
George LeS

Not a well-presented argument. The most the link provided can show is that Schumer made ill-advised remarks precipitating the run. This works fine as an attack on his judgment. But calling it (as the quote does) “interfering in the regulation process” is misleading. Normally that will be taken as Barney Frank-style interference.

I believe the general point of the article is sound enough. But we’ve got to do better than this to make the case.

On May 26, 2007 Chuck Shumer wrote a letter to the Federal Deposit Insurance Corp. which stated that Indymac was on the verge of failure. He said “I am concerned that Indymac’s financial deterioration poses significant risks to both tax payers and borrowers. The bank could face a failure if prescriptive measures are not taken quickly.” Within 11 days of that letter depositors withdrew 1.3 billion, thereby causing the collapse of the company.

Now let me give you a little bit of history on Indymac. Indymac began life as Countrywide Mortgage Investment Service, a company whose purpose was to collateralize Countrywide Financial loans too big to be sold to Freddie Mac or Fannie Mae. Sounding a bit familiar yet? Indymac went belly up due to their habit of making non-secured, Alt-a loans to individuals who lacked either collateral or sufficient capital to repay. Why did they do this? Why, because ACORN, the Association of Community Organizations for Reform Now, was slapping lawsuit after lawsuit on them for turning down a “disproportionate” number of people of color for home mortgages. After a while the feds stepped in and told Indymac that they had to make these loans, even though it was obvious that most of these individuals would default and leave them holding the bag. Incidentally, Barack Obama was in on those lawsuits and was the second largest beneficiary of the payoff from Indymac. This tells me that at that point he was being groomed for the presidency. Ironic that the man who was greatly instrumental in causing the financial meltdown through the home mortgage debacle would be elected to save the nation from it. Not too hard to put out a fire you started – if you want to, that is.

So yes, Chuckie Shumer is a snake in the grass. His people forced the mortgage companies to make the sub-prime loans and then, when the house of cards had folded, they simply informed on them to the authorities. That is how demagogues work.

Certainly true of Romney and, it seems, his entire inner circle. All seem troubled about ‘the vision thing’, Bush redux. The hope is they’ll be able to bumble their way through. BUT…The Democrats are much better funded than Romney’s primary opponents and dissemble well.

IMO the biggest risk is that the GOP fails to treat the uncommitted/independent/floating voters like adults, a fatal mistake. Do you think that’s news to Bill Clinton?

That’s certainly not what they think, so it’s interesting that they take this stance publicly. Obviously they realize that he is a Communist and that he is attempting to foment violent revolution from within. Obviously they realize that he is choking off industry and manufacturing concerns one by one, usurping power, running the nation by decree – and yet they refuse to say that the emperor is well…acting like an emperor. We will be going off a fiscal cliff on December 3st1 and perhaps they want to throw the election so that it will be blamed on the Democrats and they will come back big in 2016 after we’re too weak to care. Screw ‘em. I’m voting for Romney anyway.

An interesting alternative narrative. You claim that the government “forced” lenders to give loans to people who could not afford them. I assume that you are referring to the Community Reinvestment Act (CRA). The CRA did not compel banks to lower their lending standards at all and no one can point to a single sub-prime loan a bank was forced to make by CRA. Find one. The problem was that the banks were looking for an easy way to make money and had Fannie, Freddie, and more importantly CDOs to sell their junk loans into the market. Fannie and Freddie were culpable, but the banks were stunningly dishonest, lying to Fannie and Freddie (i.e. the US taxpayer, us) but also investors around the world. We can blame Fannie and Freddie – to a degree – but we cannot absolve the banks of final responsibility.

At the end of the day, the banks created this crisis and stole our money and have suffered no consequences as the government has bailed them out. And Obama, Ryan, and everyone else was complicit in that bailout. So much for moral hazard.

You state, “At the end of the day, the banks created this crisis…” but my reading suggests not. Especially since J. Johnson’s Fannie Mae lied and bought off everybody who tried to call them out on their greed. i suggest you and other readers check out the book “Reckless Endangerment” .

Bankers made hundreds of millions of dollars packaging mortgage bonds. They ignored their own risk management protocols by owning every step in the process. Banks owned the orgination, they owned the servicers, they even formed a consortium to own the bond insurance that’s required for every bond offering. They certainly knew or should have known, their appetite for loans to package and sell was causing a rapid rise in home valuations which would eventually crater. These are pretty smart guys after all. Why didn’t they act to avoid the debacle?
Because they were making hundreds of millions of dollars. I know the right wants to blame this mess on tangential things like red lining and Barney Frank. It’s simply not the case. Florida and Nevada lead the nation in foreclosures and subprime loans. Neither had much of a red lining problem. Most of that was aimed at under served urban communities in places like Washington DC, Philly and Oakland. The bankers created the problem and profited quite handsomely from it. When the bubble burst, they were not required to pony up any of the millions they made creating this mess. Blaming everyone but the people who earned the bulk of the profits and suffered none of the losses (at least personally) will almost guarantee a repeat of this crisis at some point in the future.

Uh, did you actually bother to read the article and follow the links? Obama was the lead attorney on a lawsuit against Citibank in 1995 for allegedly redlining mortgages around minority districts. Obama won the case and the hundred some-odd claimants were awarded money and granted mortgages to buy a home. Nearly all those people from that case have since filed bankruptcy and lost their homes. Regardless, it was that case that raised the issue to a level that Clinton evidently felt compelled to expand the CRA program and further pressure banks to not “discriminate” against minorities filing for mortgages based upon their ability to actually pay them. That precipitated a sudden loosening of the mortgage requirements for subprime loans. Not only did the banks want to further avoid lawsuits but they were compelled by government backed institutions like Fannie Mae and Freddie Mac to push these low-doc/no-doc loans because, “hey, no matter what– the loans are backed by the government”. The problem still exists to this day. Obama’s administration is still suing banks for allegedly redlining mortgages. And the government has grown to become one of the largest holders of mortgages at the tune of some 800 billions dollars in toxic loans. In effect the real estate/mortgage industry is becoming nationalized.

Brutus, you post a lot of the Left’s nonsense here. I am going to presume that you believe this stuff, and that you are not just being disruptive and spreading propaganda.

The CRA, put in by Carter, a Democrat, specifically mandated that banks make 8% of their loans to people to whom they would otherwise make loans. IOW, they were required to make some and loans. In ’95, Clinton, another Democrat, reinforced that law, giving it real teeth. It also expanded the requirement to about 40%. I know. I got a house under that deal. The bank explained it to me in great detail, as I could not believe it. They had a quota to meet. I looked it up. It was true.

Without all these junk loans, the CDO/CDS nonsense was impossible. Also without gutting Glass-Stegall in ’99, under Clinton, the swaps were not possible. They really had to work to screw things up.

Why did they do it? Because they wanted to do good via government. Oh, and because the stupid bankers lobbied Congress to remove Glass-Stegall which protected them from their own avarice and stupidity.

So, yeah, the bankers were in on it, but they were conspiring with Dems, and their big-government Republican cousins.

Every once in awhile, we have to rehash this on this site, because another Lib comes in and has to have it all explained to him, because they simply have not been told the facts before. They have been told that it was all the bankers’ fault and that “the CRA had nothing to do with it”. It just ain’t so.

You may want to research a topic before you comment on one. The issue being discussed is the allegation that banks were forced (by legislation) to make risky home loans. BOA, JPMC, and thousands of credit unions prove that was not the case.

JPMC stated that they didn’t need the bailout and was one of the first to repay the taxpayers. BOA was one of the last to take bailout money and only after their acquisition of Merrill Lynch. Almost none of the thousands of credit unions have been given bailout money.

Turn off Fox “News” and MSNBC for a while and try to learn something based on facts.

And you sir are a dupe…of Fox “News” and MSNBC. What I have stated are facts that are public record.

The talking points that you have repeated are just that, talking points. They have no basis in fact. Otherwise, why was BOA, JPMC, and all those thousands of credit unions not “tied up in lawsuits financed by taxpayers”?

If you intend to respond please do so with links showing evidence proving your (Fox “News”/MSNBC) claims.

Progressives definitely own this malaise. And the two biggest financial beneficiaries of the meltdown of the housing market, which caused the depression we are now in, were Barny Frank and Barack Obama. Convenient, no?

Actually, the two biggest “beneficiaries of the meltdown of the housing market, which caused the depression we are now in” are Fox “News” and MSNBC. Both networks now have millions of more viewers who are out of work, broke, and have nothing better to do but listen to their nonsense.

You claim that the government “forced” lenders to give loans to people who could not afford them. I assume that you are referring to the Community Reinvestment Act (CRA). The CRA did not compel banks to lower their lending standards at all and no one can point to a single sub-prime loan a bank was forced to make by CRA. Find one.

There’s a great gaping hole in that argument. To fill it in only requires that we remember that Clinton’s executive-branch HUD – not Congress – mandated in 1995 that an increasing quota of loans be made to bad-risk borrowers, and that Fannie and Freddie (still private companies then) purchase and guarantee them on the secondary market before selling them on to real-estate investors as ‘secure’ investments. Said ‘securities’, called Mortgage-Backed Securities (MBS), bundled those bad mortgages with some good ones, then chopped them into bits and shared them out worldwide to the suckers, who were given no idea of the poisoned percentage of high-risk disasters lurking in their ‘safe’ real-estate securities.

And the surviving Dems who participated in the Fannie and Freddie scams (those companies were largely Democrat sinecures, just ask Jamie Gorelick and Rahm Emanuel) have been chanting the mantra ever since that evil investment banks were at fault for peddling MBS to customers – which they could never have done without F&F being required to ‘guarantee’ those poisoned mortgages which they bought on the secondary market to free up the banks from holding the risk.

There are a lot of culprits in the Housing Crisis. But front, center, and back was the Federal Government led by Bill Clinton, Janet Reno, and Cuomo, plus ACORN agitating for loans to people who could never repay them. And Dodd, Frank, Maxine and others blocked any reforms of Fannie and Freddie. And Fannie and Freddie were masters at “spinkling the money around” so that reforms would never be made. Then the banks piled on and rating agencies didn’t fairly rate anything. All were corrupt and all are to blame.

The DEMOCRATS were the primary cause of the “failed economy that was ‘inherited’ by Obama”.

He was a force multiplier and a compliant causation warrior…for ALL that went wrong.

To “go back” to the “bad economy of Bush” is pure, unadulterated BS. The “crash” was something that Bush tried to stem and Frank, Dodd, Pelosi, Reid and Obama said WAS NOT COMING.

Moreover, they tried to blame WALL STREET…when the root cause of the problem was with ACORN, Fannie, Freddie and the “friends of Angelo” and their sweetheart crony communism deals. Goldman Sachs hid well behind their wheelbarrows of money given to Obama and the leftist liars brigade…but, the problem didn’t start or end with the bundling of the NINJA junk loans…it started with the threat of discrimination lawsuits by leftists. And it accelerated when the friends of Angelo were also the same people cooking the books at Fannie and Freddie.

The BIG LIE is that the “rich” somehow didn’t pay enough taxes to “fix” this problem. It had a Cloward-Piven stench to it from day one.

The Republicans…being among the most bumbling of messengers in the history of mankind, are wholly incapable of making this argument…or even answering the the big lies being told on EVERY issue by the small c communists.

The problem with that is…we go down with the ship, because they can’t steer worth a Tinker’s Dam.

The issue on Israel isn’t handled in a kosher manner, the issue on energy production is totally fracked up, the issue on manufacturing is corroded with lies, the issue on border crashing is a truth sieve, the issue on freedom of religion doesn’t have a prayer, the issue on running guns to drug cartels has gone off half cocked.

We allow the lies to stand in the premise and in the conclusion. It’s disheartening. And, it’s not going to merely cost us an election. It is going to cost us a nation.

Charts, graphs, stats, and fiscal forcasts only persuade reasonable people. The “big lies” are distractions to put and keep the opponent on defense. “Are you still beating your wife” is the conundrum. To out-Alinsky his student would would have to stoop to that level and be caught in the lies. To attack with the hard questions, the legitimate questions, (why are the student records sealed? i.e. or where is your budget?) changes the narrative into defending his record. The MSM won’t vet, only Romney and Ryan in the public forum can attack with the hard questions.

Far worse. Financial warfare, set up and triggered for a socialist takeover.
This time it wasn’t just Argentina; they melted the world for the ultimate prize.
The same arsonistas still rule Agentina, by they way.

A minor, pedantic quibble, when referring to the machinations of the party of slavery, KKK and Jim Crow there is nothing, nothing, democrat(ic) about them. lose the ‘ic’. They count on the weariness of the opposition to the death of a thousand (tiny) cuts.

If you want to get the message out, then give folks a good reading assignment. In this case the book of choice would be “All the Devils are Here” by Bethany McLean and Joe Nocera. Without apportioning blame, this book gives the nuts and bolts behind the whole mess, from the run-up right until the spectacular crash. There will even be a few names that folks recognize.

A word of warning to potential readers though. Do not, I repeat, do not read this before bedtime. If you’re like me, it will upset you to the point that you’ll have trouble falling asleep.

And let’s not forget another contributing factor: the energy price spikes of 2007 and 2008 that stretched the finances of many beyond the breaking point and retarded the economic activity that supports jobs.

That is also a Progressive legacy … courtesy of the Climate Change Cult (whose junk-science-based faith just happens to dovetail well with Progressive wealth-redistribution ideology) and their NIMBY allies.

And while we need to be careful that we don’t make more of this than it is … the fact that the Congress, starting in January 2007, was controlled by Progressive financial-dairy farmers who see business as their cash cows to milk didn’t help the perceptions of businesses with respect to their future prospects.

That “uncertainty” still exists to this day. It is a big reason businesses are sitting on their cash instead of hiring.